Integrated solutions will balance the books for fleet electrification
By Will Evans, VP Finance
Business transformation will typically be legislation driven or economics driven. The latter only happens with a positive business case. In our industry, the intention to decarbonise fleets to meet net zero targets is strong, but economics must balance the heavy upfront capex requirement for vehicles and new infrastructure with the operational savings (energy, maintenance etc) of EV vs. ICE.
Lower Total Cost of Ownership (TCO)
TCO takes into account the full cost profile of operating a fleet including the vehicle purchase or lease price, energy, maintenance, spares, insurance, tax and road levies.
Electric Vehicle TCO vs. Diesel TCO has already surpassed parity for many vehicle categories, classes and use cases, particularly for high-mileage fleets.
- Mile for mile, £ for £, EVs deliver better energy efficiency despite the recent disconnect between electricity and diesel prices caused by geo-political events.
- With fewer moving parts than ICE vehicles, EVs require less maintenance, resulting in a significant reduction in wear & tear costs.
- Lower tax / road levies also stack favour in of EV economics which can be further enhanced with subsidies available on certain vehicle types.
VEV models that for more and more EV use cases, significant savings can be achieved compared to an ICE fleet, particularly with falling electricity prices. Electrification payback can now readily fall within standard vehicle operating lifecycles including the cost of charging infrastructure. In short, the economics of decarbonizing fleets are wholly viable. Commercial transport operators now need to identify how to capture value ahead of legislative deadlines – both in decreased operating costs or enhanced revenues.
Competitive Advantage
For some, an electrified fleet allows access to low carbon contracts that could be key to business and revenue growth. This competitive advantage has arisen from the greenhouse gas (GHG) reporting requirements of listed and public sector businesses cascading down supply chains and resulting in buyers increasingly demanding that fleets are low carbon to meet their public commitments to scope 1, 2 and 3 emissions – a virtual ULEZ if you will.
For example, since September 2021, suppliers bidding on Central Government contracts worth £5m+ annually must have a carbon reduction plan in place.
Managing Risk Through Effective Integration
EV fleets require an ecosystem of integrated solutions connected to a large power supply. This ecosystem incorporates charging hardware, which must interconnect seamlessly with a chargepoint management software (CPMS), which must synchronise with an Energy Management System (EMS) and ensure the charging ecosystem operates within the capacity of a site’s grid constraints whilst also accommodating any local energy generation.
In terms of optimisation, the system must have scheduling functionality, take advantage of the optimum charging windows and connect with any fleet management software… and all of this must be done within a fleet’s operating pattern. This ecosystem is complex and the resulting risks are potentially costly e.g. the operational impact of a vehicle not being charged overnight or too many vehicles charging at once exceeding grid capacity limits.
Tackling this level of complexity cost-effectively only comes from deploying a designed solution with integration at its heart.
We see some genuinely progressive electrification strategies being executed piecemeal which increases the disconnect, even to the extent that different divisions are responsible for procuring different elements.
Cost Reduction Through Integration
We estimate that economies of scale and consolidated costs can reduce transformation spend by up to 15% vs. a disaggregated procurement approach. Further savings can be made in design, configuration and fewer operational disruptions during a co-ordinated installation programme.
The biggest element of TCO after the vehicle itself is energy – in this case electricity. Electricity purchasing has some nuances in that accurate demand forecasting can deliver optimised pricing.
How can you best accurately forecast energy usage? Via an integrated solution that;
- Has been designed for your fleet‘s configuration and transition.
- Has your fleet’s operating profile programmed into the CPMS that optimises the power, timing, state of charge of your fleet.
- Incorporates local generated energy and stored energy via the EMS.
In summary – through the monitoring of every single electron that flows into each vehicle.
Critically, the integrated design and implementation approach will also deliver increased levels of operational resilience from a system that’s been planned and thoroughly tested to work as an ecosystem. The pay back in operational uptime will be significant.
Ultimate Integration: Electrification-as-a-Service
We are currently designing flexible ‘as-a-service’ solutions which incorporate every component of your TCO. This is where the power, vehicles, charging infrastructure, digital operations and maintenance can be provided as-a-service for a simple monthly fee.
This removes the large upfront costs of electrifying, and locks in all, or some of your TCO for your selected lease period, allowing you to manage and accurately forecast your fleet running costs. This can be particularly beneficial when a vehicle is operating within a long-term contract.
Finally, we can offer flexible financing structures tailored to your funding, balance sheet and ownership priorities during and after the lease.
Contact us to understand how we could work with you to design a fleet transition which enables and optimises your TCO, manages operational risk and mitigates up-front investment.